Stock Views on SHIV-VANI OIL & GAS, SINTEX INDUSTRIES

BNP PARIBAS on SINTEX INDUSTRIES

Sintex operates in three main segments - building materials, custom moulding (42%) and textiles (8%). The building-materials segment is witnessing strong growth on new low-cost housing orders and prefabricated structures, which primarily targets government programmes. An order book of 26 billion in monolithic provides high growth visibility as execution is being strengthened. Bright Autoplast (India) continues to benefit from strong domestic auto sales and timely capacity expansion, which has increased revenue from 404 million in 2008 to 2,840 million in 2012. Wausaukee has been the key drag among all of Sintex's acquisitions, due to the lack of wind-turbine orders, which will recover only by FY13. The company remains geared to government impetus on low-cost housing, rural education and increasing adoption of composites. BNP finds the stock attractive at a FY12E P/E of 8.1x, compared to the market P/E of 15.6x, on BNP estimates.

IIFL on SHIV-VANI OIL & GAS

IIFL retains `Buy' rating on Shiv-Vani Oil & Gas but has cut the target price to 480. Shiv-Vani Oil & Gas, a leading domestic player in onshore oil and gas exploration, has made aggressive investments to capitalise on the about $4 billion pa onshore opportunity in India, but new order wins have been rather lean in the current fiscal. While current capacity utilisation levels is close to 100%, IIFL has pared down the revenue growth estimates for FY11-12 to 10-12%. This translates to an 18-26% downgrade in the FY11-12ii earnings estimates. Lower capex assumptions mean leverage should reduce. Also, the current valuation of 7.1x FY11ii EPS remains attractive. The revised revenue expectations and higher-than-expected interest cost levels cause us to cut the earnings estimate by 18% and 26% for FY11 and FY12 respectively. The target price of 480 is based on 8x FY12ii EPS. Leverage is likely to fall over the next two years on account of reduced capex.